The Rule of 72 explained - and why it's about more than just the numbers
A financial expert demonstrates a simple way to calculate the exponential growth of your investments.
702's John Perlman speaks to certified financial planner Paul Roelofse.
Listen below:
Roelofse explains the 'mental aerobics' behind the rule, which is simply taking the number 72 and dividing it by the interest rate you expect from your investment.
The result of that sum is the number of years it will take for your money to double.
"If you key it into your financial calculator, you're not far off in terms of the outcome."
- Paul Roelofse, Certified Financial Planner
But successful financial planning is about more than just the clinical numbers.
As Roelofse elaborates, it's important to understand that it's 'different strokes for different folks'...
"The artwork in financial planning is when you understand where people's aspirations are, and you develop a plan around those particular goals and objectives."
- Paul Roelofse, Certified Financial Planner
Other factors to consider are inflation and fluctuations in ROI, which is why Roelofse advises keeping close to your planning.
The conversation concludes with some advice on how to manage your money in these unpredictable times.
"The strategy from my lens is to say, well in uncertainty, let's invest in certainty..."
- Paul Roelofse, Certified Financial Planner
RELATED: Why you should NEVER invest with the aim of making money in the short term
Scroll up to the audio player to listen to the discussion.